Did The VIX Just Flash A Major Fear Signal?

I noted last Friday that many sentiment indicators were getting up near previous areas buyers had stepped in.  I ended it by saying the best thing would be to make more new lows this week and really get a spike in fear.  Well, we made the new lows and the CBOE Volatility Index (VIX) just triggered one of the better bullish signals over the past few years.
Taking a look at the VIX shows it just spiked up near the top end of its range over the past 20 months.

The VIX looks at volatility going out one month.  Or another way to put it, how much traders are willing to pay for S&P options a month out.  Meanwhile, the CBOE 3-Month Volatility Index (VXV) looks at the volatility over the coming three months.  In most cases, the VXV is higher than the VIX because you are willing to pay more to own something for three months as there are more chances for something bad to happen.  Makes a lot of sense if you think about it.   (more)
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